What Really Influences Short-term Rental Insurance Costs?

Don't let the cost of vacation rental insurance surprise you! Many factors within your control can impact your insurance premium — from where your property is located to your claims history. These five hidden factors can directly affect how much it costs to insure your vacation rental.

1. Type of Property

Depending on what type of property you’re going to rent, such as townhome, duplex, condominium or single-occupancy home, can result in different insurance costs. For example, condos may cost less to insure than houses because the homeowner association takes care of the property and provides security. They also cover the building exterior in your monthly fees. Single-occupancy homes require insurance for the whole property (exterior and interior) and your belongings.

2. Location of Rental Property

Just as the saying goes, location is everything. It even affects insurance costs. Higher deductibles can be incurred simply because of just the location. Often, more desirable locations, such as the beach or the mountains, are at greater risk of damage. Secondary coverage is a great option if your property is in an earthquake-risk area, flood zone or wildfire-prone area.

What is vacation rental insurance and why do you need it? Find out here!

3. Condition & Age of Property

When it comes to insuring your vacation rental property, age and condition matter. Insurers will closely evaluate these factors when determining your premiums. Older, neglected properties typically cost more to insure than newer, well-maintained ones. If you’re going to build a vacation rental home, choose materials wisely as they can also impact insurance costs.

4. Amenities

Amenities that bring relaxation to your home can also be viewed as added risks. Things like pools and hot tubs are considered liabilities, which could lead to higher insurance premiums for your vacation residence. While they may up the luxury factor, they may also crank up the price of insurance coverage.

5. Claims History

Prior claims history is visible to insurance companies for several years after filing. Having a history of claims, even ones that may feel small to you, can indicate a greater claims risk for the insurance company, thus causing some hesitation. Insurers can look at your Comprehensive Loss Underwriting Exchange (CLUE) report to help determine a premium for your new property.

CBIZ Vacation Rental Insurance — We’re Here to Help

If you’re relying only on your homeowner's insurance, landlord insurance or a host liability policy to provide coverage, you could be exposing yourself to serious risks. There are various factors to consider to ensure your property is properly insured. It's important to talk to an agent or broker before buying insurance so they can explain everything in detail and help you find the best policy. Connect with a CBIZ Vacation Rental Insurance team member today and request a free quote.

This blog may contain scenarios that are provided as examples only. Coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

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